Mortgage rates fell to new record lows, yet again, last week. The 30-year fixed rate hit 3.56% and the 15-year fell to 2.86% as U.S. Treasury bond yields eased after a disappointing jobs report for June.

The average 30-year rate has now been below 4% for 16 weeks. The low rates look better and better for those who aim to refinance, qualify and aren't stuck in bank backlog. Unfortunately, conditions have prevented many homeowners from taking advantage.

While changes in government programs boosted refinancing activity earlier this year, application volume hasn't exactly been impressive. Earlier in the week, the Mortgage Bankers Association said its market composite index, an indication of application volume, fell 2.1% last week, after declining 6.7% the week prior. The Refinance Index decreased 3% from the previous week.

As the housing bulls and bears debate whether a bottom is in, imminent or nowhere in sight, supply may be due for a change. RealtyTrac issued a midyear report on foreclosures earlier in the day, showing there were 1,045,801 U.S. properties with default notices, auction sale notices or bank repossessions in the first half of the year. That's up 2% from the last six months of 2011, but down 11% from the same time in 2011.

Overall foreclosure activity in June fell on a year-over-year basis for the 21st consecutive month, but foreclosure starts for the month increased annually for the second consecutive month, according to the report. Although foreclosure activity was down in the second quarter, a total of 31 states posted year-over-year increases in foreclosure starts.

"Lenders and servicers are slowly but surely catching up with the backlog of delinquent loans that under normal circumstances would have started the foreclosure process last year,"  said Brandon Moore, CEO of RealtyTrac. "The increases in foreclosure starts in the first half of the year will likely translate into more short sales and bank repossessions in the second half of the year and into next year."